United Kingdom: With Berkshire Hathaway unveiling a distribution agreement with Bajaj Allianz and Japan’s Nippon Life Insurance Company buying a stake in India’s Reliance Life Insurance in the past fortnight, the spotlight has again been turned on the Indian (re)insurance market’s opportunities and challenges. The full potential for growth in India’s non-life and life insurance markets is far from being reached, although the challenges to operating in a desirable, though competitive, market are mounting.

A special report by A.M. Best Co., “India Market’s Rapid Growth Poses Profitability Issues,” suggests that the global financial downturn has impacted India’s insurance market to a far lesser degree than insurance markets in some other countries. India’s economic prospects continue to offer great opportunities for non-life and life insurers, with drivers including strong economic growth, which coincides with a growing middle class in the world’s second-largest population. However, the report adds, as the attractions of operating in an emerging economy become more evident to international insurers and reinsurers, the challenges facing companies operating in India are immense.

As the Indian insurance market becomes an increasing focal point, all constituents following the market will find the report useful in identifying the key drivers and issues. The report focuses on India’s non-life, life and reinsurance sectors, and touches on themes including regulation and distribution. It examines why foreign companies are keen to participate in the market further and the rationale for consolidation among insurers. The report also contrasts the Indian insurance market with China’s.

To access a copy of this report, please visit www.ambest.com/press/031402indiareport.pdf.